JOINT STOCK COMPANY PATA SALDUS

JOINT STOCK COMPANY PATA SALDUS (UNIFIED REGISTRATION NUMBER 40003020121) FINANCIAL REPORT FOR THE 9 MONTHS PERIOD ENDED 30 SEPTEMBER 2018 (UNAUDITED) PREPARED IN ACCORDANCE WITH THE LAW OF THE REPUBLIC OF LATVIA ON ANNUAL REPORTS Saldus, 2018

CONTENTS General Information 3 Management Report 5 Statement of Management Responsibility 6 Income Statement 7 Balance Sheet 8 Cash Flow Statement 10 Statement of Changes in Equity 11 2

General Information Name of the Company Legal status of the Company Number, place and date of registration Address Type of operations Joint Stock Company PATA Saldus Joint Stock Company 40003020121, August 26,1991, Riga Kuldīgas iela 86C, Saldus, Saldus novads, LV-3801 Forestry, commercial timber preparation and related services; production of board lumber, etc. NACE 2.red. 1610 sawmilling and planning of wood Members of the Board Members of the Council Andris Krastiņš - Chairman of the Board Jānis Mierkalns Member of the Board Ilze Bukulde - Member of the Board Gatis Zommers - Member of the Board Uldis Mierkalns Chairman of the Council Jānis Bertrāns - Deputy Chairman of the Council Inga Mierkalna - Member of the Council Ieva Sniedze - Member of the Council Subsidiary enterprises 1. Name of the Company SIA PAKUĻU SPORTA BĀZE (100%) Legal status of the Company Limited Liability Company Number and date of registration in the commercial register 48503009010, November 21, 2002 Address Mežvidi, Novadnieku pag. Saldus rajons LV 3801 The main areas of activities of the Company Other sports activities Owner of the Company JSC PATA Saldus 100% Reporting period January 1 September 30, 2018 2. Name of the Company OOO Деревообрабатывающий комбинат 3 (100%) Legal status of the Company Limited Liability Company (ООО - Общество с ограниченной ответственностью) Registration number, date and place 1066027046337 October 9, 2006 Address Russia: 180005, Россия, г. Псков, Зональное шоссе, д. 44-А The main areas of activities of the Company Woodworking, production of board lumber Owner of the Company JSC PATA Saldus 100% Reporting period January 1 September 30, 2018 3

Associated enterprise 1. Name of the Company SIA SALDUS ENERĢIJA (20%) Legal status of the Company Limited Liability Company Number and date of registration in the commercial register 40103265702, December 22, 2009 Address Cēsu iela 14, Rīga, LV-1012 The main areas of activities of the Company Production of electricity, activities of holding companies. Owner of the Company JSC PATA Saldus 20% Reporting period January 1 - September 30, 2018 Parent Company Name of the Company SIA PATA (67%) Legal status of the Company Limited Liability Company Number and date of registration in the commercial register 40003448619, June 10, 1999 Address Miera iela 2, Incukalns, Inčukalna nov., LV-2141 The main areas of activities of the Company Wholesale of wood, silviculture and other foresty activities Owner of the Company Uldis Mierkalns 100% Reporting period January 1 September 30, 2018 Name and address of the Auditor SIA Nexia Audit Advice Certified Auditor's Licence No. 134 Number of registration No. 40003858822 Grēcinieku iela 9-3, Rīga, LV-1004, Latvia Certified Auditor Marija Jansone LZRA Certificate No. 25 4

Management Report To Report of economic activity for the 9 month period of 2018 Type of operations Principal activities of the Company are forestry and primary wood processing lumber production. The Company complies with FSC, PEFC and all other environmental requirements. In order to comply with these requirements the Company takes appropriate monitoring and improvement actions on regular basis, however costs for these actions are relatively low with respect to overall production costs. JSC PATA Saldus profit from operating activities for the 9 month period of 2018 are 4 448 515 EUR with the net turnover of 52 536 467 EUR, which represents earnings per share issued of 10.74 EUR. The Company s financial statements have been prepared based on the information available to board, existing laws and regulations, that gives a true and fair view of assets, liabilities, financial position and profit or loss that is generated by the Company and consolidated group. It is in interest of the Company to take care of their employees social protection and well-being, because only then the development of the Company can be sustainable. Financial risk management Main financial instruments of the Company are loans, finance and operating leases, cash and cash equivalents. The purpose of these financial instruments is to provide the Company with necessary financial depth. The Group has also other financial instruments, such as trade receivables and payables, that are generated through operational activities. The main financial risks arising from use of financial instruments are interest, credit and liquidity risks. In order to reduce financial risks, the Company performs planning of budget and cash flows, with various scenarios applied. Management performs monitoring and control of commercial activities and actual flow of finances for group companies on regular basis. An additional guarantee for proper risk evaluation are credit institutions, that assess credit risk of the company on regular basis by setting a customised credit rating for the entity. Future prospects In 2018, the Company will continue to develop and expand environmentally friendly logging according to FSC and PEFC Forest Management and Wood Flow Certificate requirements. In 2018, it is planned to expand its activities by installing additional timber drying plants with recuperation, where for heating renewable energy will be used. The Company will continue to work on raising employee satisfaction and loyalty, which will improve the efficiency of work, increase productivity, increase customer satisfaction, thus leading to an improvement in the overall financial performance of the Company. 5

Statement of Management Responsibility Management is responsible for preparing financial statements based on the initial accounting records of each year of account, which truly reflects the company's financial position at the end of the year of account, as well as results of operations and cash flows for the period. The Management confirms that, in preparing this report for the period ending on 30 September 2018, proper accounting methods were used, their application was consistent, reasonable and prudent decisions were taken. The Management confirms that the relevant International Accounting Standarts have been observed and the financial statements have been prepared in accordance with the principle of continuation. The Management is responsible for keeping proper accounting records, the company's resources conservation as well as fraud prevention and prevention of other irregularities. 6

Income Statement 2018.09.30 2017.09.30 EUR EUR Revenue 52 536 467 37 618 139 Costs of goods sold or services provided -47 635 819-35 532 167 Gross profit or losses 4 900 648 2 085 972 Distribution expenses -5 605-175 Administrative expenses -293 173-354 620 Other operating income 636 885 842 774 Other operating expenses -550 703-434 421 Interest and similar income, incl. 0 69 a) from other parties 0 69 Interest and similar expenses, incl. -239 537-247 296 a) for other parties -239 537-247 296 Profit or loss before corporate income tax 4 448 515 1 892 303 Profit or loss after corporate income tax 4 448 515 1 892 303 Profit or loss for the period 4 448 515 1 892 303 Profit/loss on share (EUR) 10.74 4.57 7

Balance Sheet ASSETS 2018.09.30 2017.12.31 NON-CURRENT ASSETS EUR EUR Intangible assets Concessions, patents, licences, trademarks and similar rights 22 539 19 502 Total intangible assets 22 539 19 502 Fixed assets Immovable properties a) land plots, buildings and engineering structures 6 163 464 6 228 830 Fauna and flora b) biological assets 862 816 862 816 Technological equipment and machinery 12 809 037 11 766 742 Other fixed assets 86 447 70 983 Fixed assets under development and construction in progress 26 902 1 722 773 Total fixed assets 19 948 666 20 652 144 Non-current financial investments Investments in group companies 1 009 149 1 009 149 Receivables from group companies 695 571 696 250 Participation in capital of associates 8 540 8 540 Deffered tax assets 384 565 384 565 Total non-current financial investments 2 097 825 2 098 504 TOTAL NON-CURRENT ASSETS 22 069 030 22 770 150 CURRENT ASSETS Inventories Raw materials and consumables 2 356 072 2 069 681 Work in progress 1 251 222 1 603 943 Finished goods and goods for sale 1 134 640 1 077 796 Fauna and flora a) biological assets 994 259 1 085 082 Advances for inventories 288 406 51 004 Total inventories 6 024 599 5 887 506 Account receivable Trade receivables 399 178 177 087 Receivables from group companies 9 980 093 6 019 719 Receivables from associates 89 945 20 729 Other receivables 211 212 176 804 Deferred expenses 304 251 270 058 Total receivables 10 984 679 6 664 397 Cash and cash equivalents 157 130 114 483 TOTAL CURRENT ASSETS 17 166 408 12 666 386 TOTAL ASSETS 39 235 438 35 436 536 8

Balance Sheet (continued) EQUITY AND LIABILITIES 2018.09.30 2017.12.31 EQUITY EUR EUR Share capital 579 916 579 916 Share premium 2 828 2 828 Revaluation reserve of non-current investments 1 370 057 1 370 057 Reserves: f) other reserves 3 741 168 3 741 168 Retained earnings: a) retained earnings from the previos year 4 807 159 2 008 402 b) current year profit or losses 4 448 515 2 798 757 TOTAL EQUITY 14 949 643 10 501 128 LIABILITIES Non-current liabilities Loans from credit institutions 11 136 737 12 526 539 Other loans 2 652 375 2 972 289 Deferred income 2 059 225 1 689 105 Total non-current liabilities 15 848 337 17 187 933 Current liabilities Loans from credit institutions 1 758 107 1 421 411 Other loans 779 391 1 158 353 Prepayments received from customers 409 980 Trade payables 4 363 266 3 902 548 Payables to group companies 0 155 467 Taxes and state social insurance payments 399 888 247 318 Other creditors 277 059 189 104 Deferred income 261 880 222 583 Accrued liabilities 597 458 449 711 Total current liabilities 8 437 458 7 747 475 TOTAL LIABILITIES 24 285 795 24 935 408 TOTAL EQUITY AND LIABILITIES 39 235 438 35 436 536 9

Cash Flow Statement 9 Month of 2018 9 Month of 2017 Cash flow from operating activities EUR EUR Profit (+) or loss (-) before corporate income tax 4 448 515 1 892 303 Adjustments for: Depreciation and impairment of fixed assets 1 460 336 1 413 671 Deprecation and impairment of intangible assets 11 055 12 710 Profit (-) or loss (+) from fluctuations of foreign currency rates 21 276 7 482 Impairment of non-current and current financial investments -180 034-166 938 Interest and similar expenses 242 349 243 851 Profit or loss prior to changes in current assets and current liabilities 6 003 497 3 403 079 Adjustments for: Increase (+) or decrease (-) of account receivable -4 329 848-2 321 636 Increase (+) or decrease (-) of inventory -137 093 1 041 152 Increase (+) or decrease (-) of account payables and other liabilities 705 062-95 466 Gross cash flow from operating activities 2 241 618 2 027 129 Interest payments -239 537-246 745 Net cash flow generated from operating activities 2 002 081 1 780 384 Cash flow from investing activities Income from selling fixed assets and intangible assets 0 1 066 713 Acquisition of fixed assets and intangible assets -769 641-163 902 Prepayments for fixed assets under development and construction in progress -375 976-1 130 689 Loans issued -11 031-21 817 Net cash flow generated from investing activities -1 156 648-249 695 Cash flow from financing activities Loans received 736 762 0 Received subsidies and grants 589 454 0 Repayment of loans -1 646 378-774 214 Finance lease payments -129 134-152 949 Changes of creditlines -353 490-467 145 Net cash flow generated from financing activities -802 786-1 394 308 Net cash flow in the financial year 42 647 136 381 Cash and cash equivalents at the beginning of the financial period 114 483 311 Cash and cash equivalents at the end of the financial period 157 130 136 692 Cash flow statement is prepared using the indirect method in accordance with Rules of The Cabinet of Ministers No. 775 10

Statement of Changes in Equity Share capital Share premium Revaluation reserves of non-current investments Other reserves Retained earnings from the previous year Current year profit or losses Total equity EUR EUR EUR EUR EUR EUR EUR December 31, 2016 579 916 2 828 1 570 057 3 741 168 1 234 618 773 784 7 902 371 Distribution of profit of the year 2016 0 0 0 0 773 784-773 784 0 Current year profit or losses 0 0 0 0 0 1 892 303 1 892 303 September 30, 2017 579 916 2 828 1 570 057 3 741 168 2 008 402 1 892 303 9 794 674 December 31, 2017 579 916 2 828 1 370 057 3 741 168 2 008 402 2 798 757 10 501 128 Distribution of profit of the year 2017 0 0 0 0 2 798 757-2 798 757 0 Current year profit or losses 0 0 0 0 0 4 448 515 4 448 515 September 30, 2018 579 916 2 828 1 370 057 3 741 168 4 807 159 4 448 515 14 949 643 11